Higher market turnover has helped Hong Kong Exchanges and Clearing report better-than-expected results for the third quarter, but brokers are wary of the challenges ahead.

The bourse, which operates the stock and futures markets, reported net profit of HK$1.2 billion for the three months to September, up 20 per cent from a year earlier and 2.56 per cent from the second quarter.

The growth was mainly driven by a 19 per cent year-on-year increase in average daily stock market turnover to HK$55.2 billion.

Daily derivative contracts traded rose 18 per cent to 286,136.

The higher turnover brought in more trading and settlement fees from investors, boosting the bourse's revenue to HK$2.13 billion in the third quarter, 26 per cent more than the same period last year. But the revenue rise was offset somewhat by amortisation and expenses related to its newly acquired London Metal Exchange. HKEx bought the world's largest metal exchange in December last year to expand into commodities.

Expenses relating to LME and other information technology development caused overall expenses in the third quarter to balloon 48 per cent from a year earlier to HK$677 million.

LME's profit contribution to HKEx in the first nine months of this year amounted to HK$318 million, but it also incurred HK$137 million in finance costs and HK$104 million in amortisation and depreciation charges. This offset the extra revenue from higher stock and futures market turnover, and HKEx reported HK$3.53 billion in profit for the first nine months, up 10 per cent from a year earlier.

LME is facing 18 lawsuits in the United States for alleged anti-competitive and monopolistic behaviour. The exchange reiterated that the allegations were unfounded and did not merit any provisions.

New listings on the main board fell to 34 in the first nine months, down 13 per cent, but that was offset by a 22 per cent increase in listings of warrants.

Louis Tse Ming-kwong, a director of VC Brokerage, said the exchange would face a challenging time next year. "There's uncertainty over the US debt ceiling and the monetary easing policy, which will affect initial offerings and turnover, eroding HKEx income in the future," Tse said.